The first edition of eVal was generally well-received by students and instructors alike, so we haven’t attempted any major changes in the second edition. Users of the first edition should therefore be able to transition to the second edition very smoothly. The biggest change in the second edition is the inclusion of a set of cases at the end of the book. Some of these cases were previously posted on the eVal Web site. With this second edition, we have expanded the set of cases to provide more complete coverage and included them at the end of the book. With this change, the second edition of eVal is a one-stop shop for your equity analysis and valuation coursework. It now includes a textbook, software, cases, data, and a variety of online resources.

While the number and titles of the chapters in the text remain the same, we have updated various chapters to incorporate recent developments and iron out a few wrinkles from the first edition. Chapter 2 (Information Collection) now incorporates recent changes in disclosure requirements, particularly those related to the passage of the Sarbanes Oxley Act. Our data provider also changed hands once again, so while the structure of the data is the same, the new owner is Hemscott and the new title is Hemscott Data. We also have updated all of the links to the latest and greatest sources of information on the Internet. Chapter 4 (Accounting Analysis) now includes a comprehensive set of examples illustrating the impact of aggressive and conservative accounting on the financial statements (students just didn’t dig the terse algebraic treatment in the first version). Chapter 5 (Financial Ratio Analysis) includes a more insightful discussion of the cross-sectional ratio analysis for Kohl’s versus Target. Note that we decided to retain Kohl’s fiscal 2001 financial statements as the basis for the running example for the book. We think that it provides a good example from a pedagogical perspective, and having several years of subsequent data now enables us to evaluate the accuracy of our forecasts in Chapter 8 (Forecasting Details). Chapter 6 (Cash Flow Analysis) includes an extended discussion of the use of cash flow analysis to evaluate the quality of earnings. Chapter 9 (The Cost of Capital) incorporates a discussion of the computation of the implied cost of capital. This computation is now available in the updated version of the eVal software. It allows a user to solve for the cost of capital that equates a given set of financial statement forecasts to a given market price.